INCOME TAXES

9 Months Ended

Sep. 30, 2011

INCOME TAXES

INCOME TAXES

11.  INCOME TAXES

Income tax expense of $8.4 million and $4.7 million were recorded during the nine months ended September 30, 2011 and 2010, respectively. The Company’s overall effective tax rate was 39% for the nine months ended September 30, 2011 compared to 37% for the same period in the prior year.

The Company is no longer subject to examination by Federal taxing authorities for years before January 1, 2008. In addition, the Company is no longer subject to examination by New York State (“NYS”) and New York City (“NYC”) taxing authorities for years before January 1, 2007. The Company is currently under examination by NYS for the NYS franchise tax returns for the years ended December 31, 2007 through 2010.

On a quarterly basis, the Company performs an evaluation of its tax positions and has concluded that as of September 30, 2011 there were no significant uncertain tax positions requiring additional recognition in its consolidated financial statements and the Company does not believe that there will be any material changes in its unrecognized tax positions over the next 12 months.

The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. During the nine months ended September 30, 2011, there were no material accruals for interest and/or penalties.

The Company has net operating loss carryforwards of approximately $7 million for Federal income tax and $28 million for NYS tax purposes which may be applied against future taxable income. Both the Federal and NYS unused net operating loss carryforwards are expected to expire between the years 2027 and 2029. It is anticipated that these carryforwards, both Federal and NYS, will be utilized prior to their expiration based on the Company’s future years’ projected earnings and therefore no valuation allowance has been recorded against the deferred tax assets. In addition, the Company has alternative minimum tax (“AMT”) credit carryover of $2 million which does not expire.